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Class action: students' lawsuit against steno institute raises questions about private career schools.

Class Action

Students' Lawsuit Against Steno Institute Raises Questions About Private Career Schools

Little Rock attorney Everett Martindale has made a name for himself bringing lawsuits against privately funded career schools.

It's a name he would just as soon not have.

"These school cases are more trouble than they're worth," he says, attempting to refute the accusation he's an ambulance chaser.

Martindale won his first school case against Delta Career College of Little Rock in 1987.

After that, he says, people started calling.

And calling. And calling.

In his most recent case, Martindale represented unhappy students of the Stenograph Institute of Arkansas.

The case, alleging fraud and breach of contract, is one of many similar cases filed nationwide. As the private career education industry has burgeoned, so have the lawsuits.

Martindale has six lawsuits pending.

Regardless of who wins, the lawsuits are a black mark on an industry already struggling with issues of quality, reputation and regulation.

Stenograph Institute of Arkansas is a prime example.

Class Action -- Literally

For months, while Martindale attempted to get the defendant to answer interrogatories, students wanting to be court reporters continued to add their names to the list of plaintiffs.

Soon, the list included 35 names.

The defendant, the only stenography school in the state, was controlled by Educorp International Inc., a Texas corporation owned by Jack Morris of Fort Worth.

The case was filed in June 1990, claiming that SIA failed to provide competent instructors and proper equipment.

By changing standards, SIA was requiring students to stay in school longer and pay more tuition, it was claimed.

Students said the school had falsely represented its accreditation and had promised job training and internships that never materialized.

Furthermore, students were forced to buy outdated equipment on which the school made a profit, the lawsuit said.

"I now have $20,000 in student loans, and I'm not doing what I was paying to learn," says Vicki Gasaway, one of the plaintiffs.

Gasaway was a student at the school from the time it opened in the summer of 1986 until May 1990, just before the lawsuit was filed.

"These are people that call a fiscal year a physical year," she says. "I paid them $14,300, and they didn't make a court reporter out of me. The man's (Morris) a criminal. We all feel our student loans should be forgiven. I'm bitter about it."

One can hear that bitterness in her voice.

Stenography is not an easy skill to learn. Gasaway describes it as learning to play the piano and speak a foreign language at the same time.

Stenographic skills allow a person to record conversations at 200 or more words per minute.

According to papers on file at the Pulaski County Courthouse, the lawsuit asked for $65,000 per plaintiff in actual and punitive damages.

Pounds of paper later, a settlement of $35,000 per plaintiff and $10,000 in fees for Martindale was agreed upon.

Morris never made good on the settlement.

A consent judgment for $200,000 was filed in Arkansas in June and soon will be filed in Texas. It gives plaintiffs a right to have the judgment satisfied out of the debtor's assets -- if there are any.

The End And The Beginning

The lawsuit was the beginning of the end for SIA.

According to the school's director, Shirley Wilson, the school halted its advertising and recruiting about the time the lawsuit was filed.

Morris, who reportedly offered training programs in exotic locations such as Trinidad, left town with numerous debts.

The school, originally housed in Little Rock's Union Station, moved to Pavilion in the Park in May 1990. It left the upscale retail and office center in January owing $4,800 in rent. The complex's manager, Norman Burnette, says he has sued for the money.

The next stop was Market Street Plaza, where SIA remained until closing its doors June 14. At the time, the school owed rent, utilities and salaries totaling about $15,000.

Enter the Stenotype Institute of Little Rock.

Although the names are too close for comfort, the Stenotype Institute, one of eight steno schools owned and operated by Seymour and Associates of Springfield, Ohio, rode in on a white horse and promised to save the day for students and faculty.

"It's unfortunate the names are so similar," says the new owner, Pete Seymour.

The Stenotype Institute moved into SIA's 22,000-SF location. And it retained the faculty. But that's where the relationship ends.

Seymour, a court reporter for 28 years, has been in the training business for 23 years.

"We didn't buy their school," he says. "We created a new school, structured along the lines of our others. It just happens to be in the same building. It just happens to have a similar name."

Because of the confusion, Shirley Wilson says, "I almost wish now we had just let this place close down and started over somewhere else."

None of the faculty members are court reporters.

"They're teachers," says director Wilson.

Seymour is retraining them and looking for court reporters to add to his staff.

He's also implementing a more rigid program for students, who will have homework assignments and will work from a textbook.

Before, there were no textbooks and no homework.

Seymour also plans to rent equipment to students rather than make them purchase their own machines.

Seymour agreed to allow students who were enrolled at SIA to finish under the new program at no additional charge.

"That's more than $30,000 in obligations we are fulfilling," Seymour says. "We're donating that because we want to make everything whole.

"The students are going to get a better education than they expected. I feel good about it."

The school has 64 students, down from SIA's high of 120 students.

Seymour says his other seven schools combined might have 1,000 students at any given time. Tuition is about $5,200 per year for day students and $2,955 per year for night students.

Private Career Education

A person could go to college for that amount of money.

And some of the private career schools cost even more.

Yet many people feel the career schools fill a need.

"I really believe the private sector should participate in providing training," says Dr. Linda Beene, director of the state Board of Private Career Education.

The board was established two years ago. Prior to that, the responsibilities were handled by the Arkansas Vocational and Technical Education Division.

The board monitors 185 schools and organizations, some of which are based out of state but offer programs in Arkansas. It also oversees 226 admission representatives.

Schools are licensed once a year, the first step in a complicated process that qualifies schools for student loan programs.

There are millions of dollars in outstanding loans issued to students of private career schools.

If a school closes, if a student becomes disenchanted before completing a program or if a student receives an inadequate education and can't find or hold a job, default on a loan is likely.

And taxpayers pick up the tab.

Beene says that last year, when five schools closed, the board was able to find other programs for more than 200 students.

Licensing is based, in part, on facilities, equipment and personnel.

Of all the reviews the past two years, only one school has been denied a license -- USA Training Academy, a truck-driving school.

Despite claims of inadequate equipment and personnel at SIA, the school never had a problem being licensed.

The state has only two staff members qualified to conduct the licensing process.

Beene admits the lack of staff is a handicap.

"A license says they've met some minimum level," she says. "We are looking at upgrading the requirements."

PHOTO : WANTING TO WORK: Thirty-five students hoping to become court reporters recently won a settlement of $35,000 each against Stenograph Institute of Arkansas. But they will probably never collect the money.

PHOTO : CONFUSING: The Stenotype Institute of Little Rock is struggling to separate itself from its predecessor, Stenograph Institute of Arkansas, which closed its doors in June owing at least $20,000.

Kelly Ford Arkansas Business Staff
COPYRIGHT 1991 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Stenograph Institute of Arkansas
Author:Ford, Kelly
Publication:Arkansas Business
Date:Jul 15, 1991
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